On this Labor Day, let’s remember what unions have done for America

Summary: On this Labor Day let’s revisit the lost history of the union movement, and its vital contribution to building America’s middle class.

To remember the loneliness, the fear and the insecurity of men who once had to walk alone in huge factories, beside huge machines. To realize that labor unions have meant new dignity and pride to millions of our countrymen. To be able to see what larger pay checks mean, not to a man as an employee, but as a husband and as a father. To know these things is to understand what American labor means.

— Adlai Stevenson’s speech to the American Federation of Labor, New York City, 22 September 1952.

Contents

The rise and Fall of America’s Middle Class

Throwing away 150 years of effort

For More Information

A note from our past

(1) Rise & Fall of America’s Middle Class

Since 1990 wages are falling as a share of Gross Domestic Income (GDI); profits are rising. The reasons are complex, the result has by now become unmistakable: a shift of our national income from return on labor to return on capital. Since the nation’s wealth is so highly concentrated, the result is rising inequality of income.

Wages as a share of Gross Domestic Income: down and falling.

Profits as a share of Gross Domestic Income: up.

(2) Throwing away 150 years of effort

The middle class was not a gift of the Blue Fairy. Instead of “Bibbidi-Bobbidi-Boo” there was 150 years of worker working together, mobilizing against their employers — who organized cartels to fight their employees and raise prices for their customers.

It was a long bloody struggle, The victory of unions was foundational for the growth of America’s middle class. The fall of the unions was a major factor undermining the middle class. It had many causes: corruption, greed, stupidity, infiltration by organized crime — and the long successful counter-revolution by corporations, now eroding away the middle class.

For a blow-by-blow of unions rise see this series by Erik Loomis (Asst Prof of History, U RI). The toll these people paid is as much a cost of building America as that paid by the members of our armed forces.

Labour unions have a simple primary function in a society, and it’s a shame that many people don’t get this because of a stupid misconception.

Employers have a huge bargaining power advantage over the employees* and applicants. That’s because they can choose much more than the applicants can.
The narrower this power asymmetry, the better the pay for employees. Employee compensation is not dominated by their productivity; that’s merely the ceiling. The relative bargaining power determines how much of their productivity they get as compensation.

The employees’ tactic for compensating the power asymmetry is to become big as well; they become a union, and strikes give them bargaining power.
A good labour union is as powerful as the employees side. A bad labour unions is significantly more or significantly less powerful than the employee side.
Sometimes the government should intervene to weaken labour unions (when they are too strong and destructive), sometimes it should strengthen them.

Sadly, millions of people have very simplistic view on this, barely able to remember but one side of the coin. These are ‘useful’ idiots who usually help the employees-sponsored politicians to weaken labour unions way below optimum. The ‘useful’ idiots deserve the low pay for their stupidity, but sadly they hurt the interests of less stupid workers as well.

*: Some ‘useful’ idiots believe that power asymmetry is irrelevant in markets because of ‘free markets duh’. Remarkably, I’ve encountered this particular stupidity only among Americans so far. Blind faith in free markets based on the state of the economical science of the mid-19th century is less common in Europe.

Thanks for the succient and powerful analysis! Now for the big bonus question: what went wrong with the US union movement? It’s not a conceptual failure, as they have done well in (for example) Germany. But they’re dying in the US private sector.

They survive in the public sector, but in a fashon that increasingly arouses public hostility (as seen in Wisconsin). They coming municipal bankrupties, largely due to underfunded pension plans, might act as cement shoes to the public unions.

I have Union history in my Finnish relatives, so maybe I should be interested. Except I’m a computer programmer, by trade, and I’ve never heard of any attempt to unionize computer programmers. Um, I don’t know, I think the idea of civil disobedience by programers would be alarming to the government. For example, was Snowden a programmer? There’s massive potential here. But if, for example, if all the programmers at Goldman Sachs went on strike or tried anything collective, I think they’d have them all in cells like that Sergey Aleynikov. That said, like right now I’m making pretty decent money, so I don’t know if I personally feel so oppressed.

Chat with some of the workers at WalMart, McDonalds, or a Amazon warehouse. For good reason preventing unions is a high-priority concern of executives at so many such corporations, a major factor in how they structure their operations.

I couldn’t make space for it in today’s column, but any affluent reader who wants a sense of what America is like for many hard-working people should read about the website McDonald’s has established to help its workers manage their family budget. The sample monthly budget they offer includes $900 from a second job; monthly rent of just $600 (which is very low even for a single-bedroom apartment in inexpensive cities, and of course ludicrous in metro New York), and zero heating expenses.

This disparity between the way many of our fellow citizens live and the lives of the 1 percent ought to inspire a lot of empathy — and to be fair, in many cases it does. On average, however, widening inequality seems to be reducing, not increasing, empathy, as the life experiences of the affluent diverge from those of ordinary workers, to such an extent that the upper class no longer sees members of the working class as people like themselves.

Of course, Rick Santorum says that this is all “Marxism talk” — even the term “middle class” — because there are no classes in America.

Labour unions are weak in Germany, too. There are few exceptions (narrow unions for bottleneck jobs, such as air traffic controllers, airline pilots, train drivers).
The weakness here is mostly due to loss of members and because the classic political ally (social democrats) has betrayed workers during the Schröder administration with Blair-like policies and then lost its left wing to the politically unacceptable communists.

I don’t know the details about labour unions in the U.S., but IIRC the sequence as that -as in the UK- there was some labour union overreach followed by a political weakening of labour unions overreach.
It would help if people understood that it’s not a binary thing, but something to optimise – and income distribution between labour and capital (the latter should include CEOs) is indeed a useful indicator.

Good point about Germany! While their unions look powerful compared with ours, they share the same trends. For example, the Agenda 2010 scheme of Gerhard Schröder (a Social Democrat, German chancellor 1998 to 2005) lowered taxes & unemployment benefits and weakened labor laws. For results see “The real cost of German labour reforms“, Guardian, 26 October 2012.

The thing about programmers is that we’re more analogous to those dockworkers back in the 30’s. The dock workers and the steel workers, back in those old days those guys mattered. They weren’t really like the Walmart employees. Those jobs were key to the economy; it was all about those workers who had their fingers on the jugular vein of this economy — collectively getting them all to simultaneously squeeze. Nothing is more critical to the current economy than computers. All of the great fortunes, all the money in the banks, every credit card balance, every tax bill — it’s all just a bit of memory in a computer somewhere.

If labor really comes back, in a real way with real power, not just nostalgia, I think this is what it’s going to be like. Maybe this seems a little scary, maybe we’re not ready for it. Perhaps this is why labor is dead.

These comments about the future of unions are fascinating. The potential is there. But…

(1) It took a century for unions to develop. Not just the organization and methods, but workers understanding about the importance of collective action. Now so much of that has been lost. It will not be quickly or easily rebuilt, in my opinion.

(2) Corporations quickly and effectively mobilized to fight unions, whose victory came only with the Great Depression — and the resulting desparate need of businesses for stability (and fear of communist revolution). Now that fear is gone, and they have developed powerful techniques to fight unions.

In brief, these yearnings and dreams for return of the past are (I fear) just that and nothing more. Hard work, years of effort, and sacrifices will be necessary to recreate what we’ve lost.

Jack Metzgar, in his book Striking Steel ,has an account of how in the late 40’s his (steelworker dad’s ) family had no refrigerator, or car, or TV. By the ’60’s, they took each of them for granted and recalled the joy on the occasions when they acquired each amenity. He describes that period as a liberation, tracking a negotiated doubling of wages ,the acquisition of discretionary income that propelled the blue collar working class into the ranks of the ‘middle class’, the aspirational category that has displaced the popular notion of a proletariat or working class in contemporary consciousness. (My Dad was a steelworker on strike in ’59, so the narrative strikes close to home )

It is like today when (rarely) a working class person gets a good job that means some discretionary income, no more hand to mouth, no more robbing Peter to pay Paul. LIBERATION. (Personally, been there, done that.)

Railroad new hires, perhaps you get the concept?

Second: The official Army Historical Series has a fascinating volume (one of 3, btw) ,entitled The Role of Federal Military Forces in Domestic Disorders, 1877-1945. There was a class war, with a clear military component. The insurgents were desperate American working class trade unionists, or otherwise marginalized plebes arrayed against the new oligopolists (plutocrats?) .

Want a decent society? Trade unionists use their Constitutional rights to freely associate and set terms on the sale of their labor power. Mass production, mass consumption in USA. Worked great for the middle strata professionals , too, who could fix the teeth of /provide health care for / fill the prescriptions of the newly endowed masses. Worked well, until the rentiers got greedy and tried to queer the deal.

Or , instead, Walmart race to the bottom of atomized minimum-wage slaves,

Which country do you want your kids to live in?

Real world LIBERATION. We want more freedom. That means freedom from want. That means free collective bargaining. That means unions.

(PS: I end my union training classes with Boyd’s “To Be or To Do” As Napoleon says , the Moral to the physical is as three to one!)

“Trade unionists use their Constitutional rights to freely associate and set terms on the sale of their labor power.”

That is a nice goal, but the means remains uncertain. Our inability to take collective action plagues many aspects of American society, from local service clubs (whose members are rapidly aging), unions, and politics.

>Our inability to take collective action plagues many aspects of American society, from local service clubs (whose members are rapidly aging), unions, and politics.

That’s an interesting observation. It’s true our society is increasing becoming unable to form collectively to get anything done, which is pretty evident one of the symptoms of the decline in social capital of the United States, ala Bowling Alone or in other words, the facebookification of our society. I’m 24, and let me tell you just getting them into a phone call (or a Skype call) is difficult enough, let alone going out in the real world and doing something together…

I’d like to point out though, there is another minor reason organizations like service oriented clubs have declined, and I think it’s their lingering elitism still. The Rotary clubs are definitely most guilty of this, but I think this is alive even in other organizations like the Kiwani’s club and the Lion’s clubs. They seem to exclusively want people from upper income “professional” backgrounds, and seem to look down on working class or otherwise “poorer” backgrounds, even if they’d be able to pay dues and meaningfully contribute. I’m a currently unemployed college student, and I’d be able to pay the minor dues of my local Lion’s club. I also have a lot of volunteer experience under my belt, and yet, I can’t help but think they may reject me, because I am not in a white collar profession. Their insistence on also keeping the formal invite system (even if they’ve loosened up quite a bit on it over the years) is also pretty dumb in the face of a total demographic crisis in such organizations.

So while their decline is mostly due to factors out of their control. Some of their own actions seem to accelerate their own demise.